Obamacare-Mandate Delay to Have Little Impact on Public Employers

State and local governments aren’t likely to have a big reaction to the news that the White House would delay Obamacare’s employer mandate for one year.

State and local governments aren’t likely to have a big reaction to the news that the White House would delay Obamacare’s employer mandate for one year, according to an independent consultant, though some public employers say they’re glad about the postponement.

Citing concerns from the business community, the U.S. Treasury Department announced late Tuesday that it would postpone the mandate’s reporting requirements and financial penalties until 2015. Under the mandate, employers with 50 employees or more were required to provide affordable health coverage to their employees working 30 hours or more per week or pay a penalty ($2,000 per worker if they provided no coverage; $3,000 per worker if their coverage was considered unaffordable).

Like private businesses, state and local governments must comply with the mandate. But most government employers already provide generous benefits to their employees: 73 percent, higher than any other industry, according to the Kaiser Family Foundation. So the policy wasn’t expected to have a significant impact, says Rick Johnson, senior vice president at Segalco, who advises public employers on personnel issues.

States and localities spent most of their time trying to figure out which employees (for example, seasonal workers) would be considered full-time under Obamacare and developing strategies to manage their part-time employees to keep them under the 30-hour limit. The Treasury Department’s postponement doesn’t really change that work, Johnson says, though it does give public employers more time to comply.

“I don't want to say it's a non-event because it will give them a little leeway,” he says. “But there are these things that they're working on anyway, and I don't think it's going to change that.”

Some groups, however, said they were pleased with the White House’s action. The National School Boards Association (NSBA), which represents school districts that collectively employ more than 6 million people nationwide, had submitted lengthy comments to the Treasury Department, asking for clarifications on issues specific to the public school sector. For example, substitute teachers who teach at different schools or part-time employees who perform additional duties, such as coaching, raise some unanswered questions about the initial guidance for calculating full-time employment, says Francisco Negron, general counsel for NSBA.

Tuesday’s announcement should allow the federal government, the school boards and other employers to continue the dialogue about these issues, he says, without the health reform law’s penalties looming in 2014.

“We were glad to see they have taken what we think for the time being is a prudent approach, to slow things down in response to our concerns,” Negron says. “This seems to suggest that they heard those concerns, and we can continue to work to make sure we are in compliance with the law.”

Some public employers had threatened to cut workers’ hours in response to the employer mandate. Most notably, Virginia Gov. Bob McDonnell ordered state agencies in February to cap part-time employees’ hours at 29 to avoid the mandate’s penalties. McDonnell’s office didn’t immediately respond to questions about whether that policy would continue after the mandate’s delay.